TRENTON — At an Assembly committee hearing on a referendum to expand casino gambling to North Jersey — the fifth such hearing in the Assembly alone in recent years — lawmakers on Monday reprised many of the usual themes on both sides of the issue.
Assemblyman Ralph Caputo, D-Essex, a former Atlantic City casino executive, again advocated for a statewide ballot question on the issue in November. Caputo said the only way to salvage Atlantic City was to send up to $200 million a year in new tax revenues from a pair of North Jersey casinos — the Meadowlands and Jersey City are considered to be the most likely locations — to a non-profit group that will encourage non-gambling development in the struggling seaside resort city.
The tax rate for the new casinos could be 40 to 60 percent, he said.
But Assemblyman Chris Brown, R-Atlantic, said he is still waiting for details on that new revenue stream.
“How is that money that you are earmarking for Atlantic City actually going to help Atlantic City?” Brown asked. “Is it going to pave the roads so that the people who are unemployed can get out of town?”
Caputo said that Brown is “in denial” about the Atlantic City’s dire predicament, marked by a decline of more than 50 percent in gambling revenues for the casinos and tax revenues for the city over the last decade. Casino revenue peaked at $5.2 billion in2006 and dropped to $2.56 billion last year.
Brown and Gordon MacInnis, president of the left-leaning think tank New Jersey Policy Perspective, asked the members of the Assembly Judiciary Committee to hold off on sending the measure to the full Assembly for a floor vote — which is expected to take place later this month — until a tax rate is established.
Atlantic City’s casinos pay an effective tax rate of 9.25 percent, while newer casinos in New York and Pennsylvania pay about 50 percent of their gross gambling revenues in taxes. Caputo said he would guess that the rate for North Jersey casinos could be 40 to 60 percent.
That’s roughly double the preliminary estimates that state Senate President Stephen Sweeney, D-Gloucester, and state Sen. Paul Sarlo, D-Wood-Ridge, have offered in recent months. Higher casino tax rates nationally have tended to produce few permanent jobs because developers have less incentive to build elaborate facilities given the lower return on investment.
MacInnis also said a Meadowlands casino — in concert with the opening of the neighboring American Dream Meadowlands shopping and entertainment complex, still officially forecast for fall 2017 — would make traffic on Routes 3 and 17 even worse than it is now. MacInnis added that New York officials likely would respond quickly to the opening such a casino with one of their own in New York City.
But the Judiciary Committee’s chairman, John McKeon, D-West Orange, said that bold action such as building North Jersey casinos is needed because “Atlantic City has been a sinking ship for a long time.”
Carl Icahn, the billionaire investor who owns the struggling Trump Taj Mahal casino in Atlantic City, said last week that he would invest $100 million to renovate that facility, unless voters approve a pair of North Jersey casinos in November. Brown said that was just one example of the harm that would be done to Atlantic City if the statewide monopoly on casino gambling that it has enjoyed for nearly four decades is ended.
Caputo replied that Icahn’s comments were “inappropriate.”
The casino resolution is sponsored by 17 of the 48 Democratic members of the Assembly, including Speaker Vincent Prieto of Secaucus and Gary Schaer of Passaic, the chairman of the Assembly Budget Committee. It is widely expected to achieve the 60 percent vote threshold needed for approval.
The state Senate, which held a similar hearing last week, already voted, 33-6, for a nearly identical resolution in December and is expected to do so again.
“I’ve long said North Jersey gaming was a matter of when, not if, and with this proposal, voters will get the chance to strengthen our state’s financial future,” Prieto said in a statement. “This bill does the right thing for both Atlantic City and our senior and disabled residents.”
Bidding for the new casino licenses initially will be restricted to entities in which the current operator of an existing Atlantic City casino is the majority partner.
